Calculated Moves, PChttps://www.calculatedmoves.com
Charlotte Small Business AccountantsFri, 03 May 2019 02:47:23 +0000en-UShourly1https://wordpress.org/?v=5.0.4Change of Addresshttp://feedproxy.google.com/~r/charlottecpafirm/lHAp/~3/1O6K6N0TMwU/
Wed, 27 Mar 2019 18:17:17 +0000https://www.calculatedmoves.com/?p=6318Moving to a new home can mark an exciting transition in life. Maybe you’ve just gotten married and you’re settling into a real house after a series of walkup apartments. Maybe your children are finally out of the house and you’re trading four bedrooms and a suburban backyard for lofty downtown sophistication. Maybe you’re ready … Continued

]]>Moving to a new home can mark an exciting transition in life. Maybe you’ve just gotten married and you’re settling into a real house after a series of walkup apartments. Maybe your children are finally out of the house and you’re trading four bedrooms and a suburban backyard for lofty downtown sophistication. Maybe you’re ready to retire and opt out of snowy winters for good.

Moving is also a monumental pain in the butt. We’re not just talking about packing up and sorting through years (decades?) of accumulated stuff. We’re talking about the practical details of changing your address with everyone from your bank to your car registration to your family . . . including, of course, your Uncle Sam. If you don’t dot your i’s and cross your t’s, you can wind up in a fair amount of trouble. And so this week’s story takes us deep into the weeds of something you wouldn’t think the IRS needs to argue about: the all-important “last known address.”

Damian and Shayla Gregory moved from Jersey City, NJ to nearby Rutherford on June 30, 2015. For some reason, they filed their 2014 tax return from their old address in Jersey City. Then they won the lottery. Unfortunately, it wasn’t the Powerball, it was the audit lottery. And they didn’t win the $7,000 per week for life they were hoping for — they won a demand for more tax!

While the IRS was auditing them, the Gregorys filed a power of attorney and extension to file their 2015 return from the new address. Now, you’d think that would be enough to put the IRS “on notice” that they had moved. Sadly, you would be wrong. And so, with the audit over, the IRS sent their demand to the Gregory’s old address in Jersey City. (The Post Office returned it as undeliverable.) The Gregorys finally learned about the deficiency three months later. They filed a petition challenging it in Tax Court literally that same day. But the IRS told them no dice.

Naturally, the IRS has miles of red tape governing all of this. 26 CFR §301.6212-2 defines “last known address” as the one that “appears on the taxpayer’s most recently filed and properly processed Federal tax return, unless the Internal Revenue Service (IRS) is given clear and concise notification of a different address.” Rev. Proc. 2010-16 goes on to list the forms that qualify, and states clearly that the power of attorney and extension don’t count. Even the instructions for those forms say you can’t use them to change your address. And so the Tax Court ruled for the IRS.

The Gregorys weren’t completely off-base asking the IRS for a break. Courts have said that if the IRS knows a taxpayer has moved, they should exercise due diligence to find them, even if they haven’t given notice. Having said that, last October the Tax Court ruled the IRS didn’t have to sic the bloodhounds on Daniel Sadek, a California subprime lending “mogul” who racked up $25 million in tax deficiencies before fleeing his “last known address” in California to ride out an FBI investigation in Beirut. (Nothing suspicious about that move, right?)

Here’s the broader lesson from this week’s story. Beating the IRS starts with big-picture strategies like choosing the right business entity, finding the right benefit plans, and taking advantage of code-based savings strategies. But concepts and strategies aren’t enough. Implementation is the key to putting them to work, and you can’t overlook the details. That’s where we comes in. So call us when you’re ready to work the system and let us put those strategies to work for you!

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Tue, 19 Mar 2019 17:00:46 +0000https://www.calculatedmoves.com/?p=6315Early on a Tuesday morning, FBI agents fan out across the country to arrest dozens of people in six states on racketeering charges and other offenses. The next Gambino family mob “rollup”? No, it’s “Operation Varsity Blues” — the newest celebrity scandal, featuring CEOs and Hollywood stars bribing their children’s way into competitive colleges! And, … Continued

]]>Early on a Tuesday morning, FBI agents fan out across the country to arrest dozens of people in six states on racketeering charges and other offenses. The next Gambino family mob “rollup”? No, it’s “Operation Varsity Blues” — the newest celebrity scandal, featuring CEOs and Hollywood stars bribing their children’s way into competitive colleges! And, like with most good scandals, there’s a tax angle lurking underneath the juicy gossip.

Some of our most successful CEOs never finished college. The list includes Bill Gates, Steve Jobs, Mark Zuckerberg, Russell Simmons, and dozens more. Astonishingly, millions of Americans manage to find happiness and success in life without ever going to college at all! But competition for spots at top schools grows ever more intense (Stanford University’s acceptance rate is down to one out of twenty.) That’s forced striving students to up their game . . . so is it any surprise their striving helicopter parents are upping their game, too?

This week’s story starts with a former teacher named William Singer, who established a college counseling business called “The Key” and a nonprofit called Key Worldwide Foundation. The Key may have been a legitimate-enough service for affluent families who wanted a regular dose of rigging the system. But parents who were willing to pay for VIP-level rigging could make “charitable” contributions to the foundation, which Singer used to bribe test administrators and college coaches. Singer bragged that he had helped 761 families open what he called a “side door” into top schools.

In one case, actress Felicity Huffman shamelessly “donated” $15,000 to Singer’s foundation to doctor her daughter’s SAT results. (Huffman is currently free on $250,000 bail.) In another, Lori Loughlin, who played Aunt Becky in the critically-acclaimed drama “Fuller House”, paid $500,000 to market daughters as rowing team recruits at USC. Of course, neither girl would recognize a scull if you knocked her over the head with it. (Loughlin is free on $1 million bail — bigger bribe = bigger bail.) Both families should probably tell their accountants to expect correspondence from the IRS about those bogus charitable deductions.

Ironically, the Tax Code includes plenty of legitimate breaks for financing college costs. Scholarships and fellowships are generally tax-free. There’s the American Opportunity Credit, the Lifetime Learning Credit, and an above-the-line deduction for student loan interest. The problem, of course, is that none of those breaks help you get in to that pricey school in the first place! (You can’t even deduct your kids’ SAT test-prep fees.)

As for Singer, he’s been cooperating with feds since September. He pled guilty just hours after the story broke, and it looks like the Justice Department has all the receipts they need to lock down more convictions. That’s typical for federal prosecutors, who don’t bring charges until they have a stack of evidence tall enough to stand on and change a light bulb. Coaches and even some of the parents have been fired, too.

So, how hard are you working to get your kids into college? It used to be enough just to schlep them from soccer games to violin lessons to test-prep classes. Now you’ve got to start committing felonies, too? Are you sure Olde Ivy is really worth it? Fortunately, you don’t have to commit any crimes to put smart tax planning to work to pay for it, wherever they go. You just need a plan. So call us when you’re ready to ship the kids off to school, and let us help you save enough to throw a party when they graduate!

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Wed, 13 Mar 2019 18:44:33 +0000https://www.calculatedmoves.com/?p=6312Choosing where to live is one of the most important decisions we make on this journey we call life. Do we embrace the familiar comfort of the small town where we grew up, or do we strike off for fame and fortune in the big city? Do we celebrate new advances in home snowblower technology, … Continued

]]>Choosing where to live is one of the most important decisions we make on this journey we call life. Do we embrace the familiar comfort of the small town where we grew up, or do we strike off for fame and fortune in the big city? Do we celebrate new advances in home snowblower technology, or do we opt-out of winter entirely on a houseboat in the Keys? Choosing where to put down roots is an intensely emotional choice. But for some of us, it’s a tax-planning choice, too.

Bryce Harper is a baseball player who lives in his native Las Vegas. Up until last season, he played right field for the Washington Nationals, where he became the youngest National League MVP ever. He’s especially good at hitting home runs on Opening Day, and was the first player to hit five home runs in Opening Day games before age 25. Last year, Harper made $21.65 million for his effort, which means the umpires at the IRS will be rooting for him all season long.

Harper is 26 now, with a new wife and probably a family on the way. Time to come to the mound for some adult financial planning, right? And so, on March 2, Harper signed a 13-year, $330 million contract with the Philadelphia Phillies. It’s the biggest free-agent deal in American sports, and works out to $156,695.16 per regular-season game. Remarkably, it wasn’t even Harper’s highest offer — the Giants offered $312 million over 12 years, while the Dodgers reportedly dangled north of $35 million per year.

But Harper’s choice is a great example of tax planning. The California offers Harper let go may have looked more generous than the Philly pitch he swung on. But California beans players with a 13.3% tax on income over $1 million, while Pennsylvania caps its tax at just 3.07%. Think of the Philadelphia pitch as a meatball down the middle, while the California offers were more like hanging sliders.

Harper won’t escape California tax entirely. He’ll pay whatever “jock tax” applies to income from road games, which means paying the California rates when he visits National League rivals in San Francisco, Los Angeles, and San Diego. But the difference could mean Harper keeps tens of millions more in Philadelphia than in California.

Baseball players aren’t the only 1%-ers to consider taxes in their decisions where to work. In 2016, hedge fund manager David Tepper, who earned $6 billion from 2012 to 2015, fled New Jersey for Florida. His move could cost the Garden State hundreds of millions in tax. The Tax Cuts and Jobs Act of 2017, which caps deductions for state and local taxes at just $10,000, has nudged residents of high-tax states like New York and New Jersey to consider sunnier tax climates in Florida, Texas, and Nevada.

And Harper can be glad he’s not facing even tougher choice-of-venue questions. For example, the Supreme Court just agreed to decide whether North Carolina can tax the undistributed income of a New York trust based on the beneficiary’s residence in North Carolina. Now, that may sound like a boring technical question. (Ok, it is.) But it’s the kind of debate that gets the coolest kids in the Tax Club really excited.

The bottom line here is important whether you’re at the plate or just watching from the stands. Every financial decision you make has at least some tax consequence. And the choices you make today can produce home runs for season after season. So make the smart choice . . . come to us for a tax plan, and see if we can help you hit it out of the park!

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Thu, 07 Mar 2019 18:16:10 +0000https://www.calculatedmoves.com/?p=6285She’s a long-haired European exotic beauty. She lives a life of glamour and luxury that most of us can only dream of. She has 300,000 followers on Instagram. She’s earned $3 million in royalties and endorsements. She’s launched fashion lines, and been the subject of two books. Oh, and she has absolutely no idea how … Continued

She’s a long-haired European exotic beauty. She lives a life of glamour and luxury that most of us can only dream of. She has 300,000 followers on Instagram. She’s earned $3 million in royalties and endorsements. She’s launched fashion lines, and been the subject of two books. Oh, and she has absolutely no idea how much she pays in taxes, and she wouldn’t care if she did.

Who is this gorgeous creature? Is she latest supermodel sensation, posing for the Sports Illustrated swimsuit cover on a deserted Croatian beach? Is she Kim Kardashian’s newest best friend? Perhaps she’s about to star in the next James Bond movie? No, no, and no. Her name is Choupette, and until fashion icon Karl Lagerfeld died last week at age 85, she was his . . . cat. She’s also Lagerfeld’s heiress, which may make her the richest cat in the history of her species.

Lagerfeld cut an instantly recognizable figure with his trademark white hair, black sunglasses, fingerless gloves, and starched collars. He’s credited with breathing life back into France’s House of Chanel by revamping their ready-to-wear line after the death of founder Coco Chanel. His efforts earned him a fortune estimated at $200 million. But he died childless, with no partner and no obvious heir. Enter Choupette . . . who gets enough money to pay for all the Little Friskies she can eat for the rest of her life!

Leaving money to pets is more common than you think. It’s not a great tax-planning move because bequests to pets — unlike those to spouses or charities — are subject to estate tax, which starts at 40% on amounts over $11.4 million. But plenty of people love their animals more than their families. Michael Jackson left $2 million for his pet chimp Bubbles. And hotel heiress Leona Helmsley, who served 19 months in prison for tax evasion, left $12 million for her dog Trouble. (That’s more than some of her grandchildren got!)

Obviously, the money doesn’t go to the animals. (Can you imagine standing in line behind a cat trying to use an ATM, or writing a check to pay for groceries?) It goes to a trust, with an actual person controlling the money for the benefit of the animal. In 2016, Minnesota became the last state in the country to authorize pet trusts. Many of those statutes even dispense with the usual “rule against perpetuities” limiting them to 21-year terms, making them appropriate for longer-lived animals like horses or parrots.

Sadly, there’s one complication standing in the way of Choupette getting her paws on her inheritance. She lives in France, where pets are property, and can’t legally inherit anything themselves. (Has PETA been notified?) They can’t even benefit from a trust. So Lagerfeld would have to leave Choupette’s money to a nonprofit organization or a trusted friend to take care of her.

And that, in turn, brings up one final question: who inherits Choupette’s fortune when she dies? France has the highest inheritance tax in Europe, with rates running up to 60%. And while cats may always land on their feet, they can’t hire estate-planning attorneys. (While we’re on that topic, does having nine lives mean Choupette gets to pay the tax nine times?)

We realize you haven’t earned millions in royalties from licensing your image. But if you had, you’d probably want to keep as much of them as you can. So call us, and discover just how stylish tax planning can be!

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Wed, 27 Feb 2019 13:07:42 +0000https://www.charlottecpafirm.com/?p=6281Oscar night is the biggest night in Hollywood. The stars shine just a little bit brighter. The red carpets stretch just a little bit farther. And the bloated egos get just a little bit bloatier, if that’s possible. (Here’s looking at you, Bradley Cooper.) Ironically, fewer and fewer of us tune in to the actual … Continued

]]>Oscar night is the biggest night in Hollywood. The stars shine just a little bit brighter. The red carpets stretch just a little bit farther. And the bloated egos get just a little bit bloatier, if that’s possible. (Here’s looking at you, Bradley Cooper.) Ironically, fewer and fewer of us tune in to the actual ceremony. Why give up hours of your life watching celebrities congratulate each other when you could fit a couple of full-length movies in the same length of time?

Nominees for the top five prizes — Best Actor, Best Actress, Best Supporting Actor, Best Supporting Actress, and Best Director — bring an extra guest to the party, in the form of the IRS. It’s not because they take home any actual cash. It’s because they leave with an “Everyone Wins” swag bag assembled by Distinctive Assets, a product-placement company that’s not affiliated with the Academy of Motion Picture Arts & Sciences, but also not afraid to hitch their wagon to Oscar’s relentless publicity machine.

Distinctive Assets has never been shy about promoting the value of their bag. In 2016, the collection, which included a 10-day trip to Israel, a 15-day “Walk Japan” tour, a year’s worth of Audi rentals, and a 10,000-meal donation to the animal shelter of the donor’s choice, crossed the $230,000 line. That sounds like a lot to the average fan. But it may not mean that much to the stars who can make north of $20 million per picture.

Of course, calling the bag a “gift” doesn’t actually make it a gift. That’s where the IRS comes in. The tax code defines a gift as something you get out of affection or respect. And while the Avaton Luxury Villas Resort in Greece may have really liked watching Christian Bale retreat to an undisclosed location in Vice, the real reason they’re comping him a week at the beach is to attract new guests. So . . . the swag bag is taxable income. In fact, Distinctive Assets even sends the nominee a Form 1099 reminding them to report it!

This year’s bag includes the usual collection of glamour vacations, including a small-ship cruise to Iceland, the Galapagos, the Amazon, or Costa Rica & Panama. You’ll also find the sort of only-in-Hollywood treats you would expect: Coda Signature gift boxes with cannabis-infused hand-painted truffles and chocolate bars, private phobia-relief sessions with the world’s #1 phobia expert, a CloSYS “spa kit for your mouth,” and a PETA spy pen to help blow the whistle on animal abuse.

But this year, there’s no price tag. “A great gift has nothing to do with the retail value,” Distinctive Assets founder Lash Fary said in a statement. “For years we have been breaking one of the cardinal rules of gift giving by disclosing the price tag. Instead, we are trying to start a new tradition by simply celebrating the fun and festive nature of this legendary gift bag.” (Of course, they’ll still be declaring an amount on those 1099s they send next January.)

What if Best Supporting Actor Mahershala Ali doesn’t want the tax headaches that come with his goodies? He can always give some to charity. (Does he really need the Blush & Whimsy limited-edition rose gold lipstick?) But he still has to report the value of anything he re-gifts in his income before deducting it as a charitable gift.

Last year, the Academy proposed a new award for Outstanding Achievement in Popular Film. It would be the first new category since Best Animated Feature in 2001. And it gives us hope that, someday, they’ll add an Oscar for Best Performance in Tax Planning. Wouldn’t that be great? We’ll keep you posted and let you know when to look for us on the red carpet!

]]>https://www.calculatedmoves.com/and-the-oscar-goes-to-the-irs/Don’t Worry, No One Will Noticehttp://feedproxy.google.com/~r/charlottecpafirm/lHAp/~3/SmpWbbwcQZk/
Tue, 19 Feb 2019 15:53:53 +0000https://www.charlottecpafirm.com/?p=6276Would anyone in their right mind sit down from scratch and develop the tax withholding system we have today? The IRS publishes tables telling employers how much to take out of everyone’s paycheck, depending on their income, their filing status, and the amount they guesstimate they’ll be claiming in deductions and credits. Then, at the … Continued

]]>Would anyone in their right mind sit down from scratch and develop the tax withholding system we have today? The IRS publishes tables telling employers how much to take out of everyone’s paycheck, depending on their income, their filing status, and the amount they guesstimate they’ll be claiming in deductions and credits. Then, at the end of the year, employees file their actual returns and hope it’s the IRS coming out on the short end.

Lots of Americans use the tax withholding system as a piggy bank. Yes, letting the IRS hold your money for a year amounts to giving them an interest-free loan. And no, they won’t do the same for you. But with savings accounts paying just a hair over 1% right now, plenty of taxpayers decide the forced discipline is worth more than the interest they give up.

In 2018, the average refund amounted to $2,782, which is enough to cover some bills, take a nice weekend trip, or maybe redo your family room for big-screen TV nirvana. But one enterprising 29-year-old named Christopher Blanchett found himself in a position to snag a refund worth writing home about. And when you hear his story, you’ll realize that sometimes these stories of ours just write themselves.

Two years ago, Blanchett sat down to file his return. He had a W2 from a Sizzling Platter restaurant where he worked in Utah reporting $1,399 in income and zero withholding. And somehow, he had a W2 from a Tampa nursing home showing $17,098 in wages and a million dollars in withholding. But where you or I might have thought, “hmmmm, something looks off,” Blanchett smelled opportunity — and he chose not to look his gift horse in the mouth.

So Blanchett chose to file his return with a straight face, based on those W2s. In due time, the IRS sent him a check for $980,000. He took that check and deposited in Sun Trust Bank. Sun Trust suspected fraud (ya think?), froze the funds, and eventually sent the money back to him. So Blanchett took that check and deposited it into a credit union, as one does, “falsely representing that the funds were from the estate of his deceased father.”

And what did Blanchett actually do with his new-found wealth? He bought himself a used Lexus RC 350 sport coupe. Now that’s not a car to sneeze at. The Wall Street Journal calls it “a capering boulevardier with a soundtrack of cute, kitteny growls.” You can get one with all-wheel drive, heated leather seats, and Apple Carplay® integration. But really . . . a Lexus? That seems like an awfully mild play for a seven figure score. (Seriously, you’d think at least part of that windfall would find its way to a Ferrari dealer.)

By that time, the IRS had realized maybe there was a problem with a guy getting back 53 times his income in a refund. Last month, they seized $919,251 that was left in his bank accounts, along with the Lexus. And they’re looking to take $809.94 that Blanchett’s insurance company refunded him when he canceled the coverage on the Lexus. (Kinda like the Grinch taking the last can of Who Hash, right?) Prosecutors haven’t filed charges against Blanchett, at least not yet. But it’s a fair bet this story won’t end well for him.

There’s no real lesson in today’s story, other than don’t be a bonehead. But there’s a great way to give yourself a nice refund, and you won’t risk the IRS showing up with a tow truck and making off with your wheels. That answer, of course, is planning. So call us when you’re ready to save, and enjoy the ride!

]]>https://www.calculatedmoves.com/dont-worry-no-one-will-notice/Champagne Wishes and Caviar Dreamshttp://feedproxy.google.com/~r/charlottecpafirm/lHAp/~3/LK68WNtvnXI/
Tue, 12 Feb 2019 19:23:39 +0000https://www.charlottecpafirm.com/?p=6273Just a couple of generations ago, it just wasn’t polite to discuss money. We mostly knew who was rich and who wasn’t. But it wasn’t until about 1984, when crack investigative journalist Robin Leach launched Lifestyles of the Rich and Famous, that Americans began following celebrity houses, cars, and bank accounts with the same gusto … Continued

]]>Just a couple of generations ago, it just wasn’t polite to discuss money. We mostly knew who was rich and who wasn’t. But it wasn’t until about 1984, when crack investigative journalist Robin Leach launched Lifestyles of the Rich and Famous, that Americans began following celebrity houses, cars, and bank accounts with the same gusto as batting averages and quarterback ratings.

Today, of course, everything is different. The Forbes 400, along with local business papers, blow the whistle on executive salaries and net worths for everyone to see. Glassdoor.com lets you see how much your colleague in the next cubicle makes. And Zillow lets you (sometimes literally) peek into your neighbors’ houses and see just how much their kitchen remodels added to their value.

So, with tax season just getting off to a roll, we got to wondering how much tax professionals make? Last week, Forbes magazine dug up some data from the Bureau of Labor Statistics that show the average tax professional isn’t rolling in the sort of rock star money everyone expects!

For 2017, the average tax preparers earned $38,730. That’s actually less than the U.S. average of $44,564 for a 40-hour workweek. Of course, that figure covers a wide range, with the bottom 10% earning under $20,170 and the top 10% clearing over $81,740. Many tax preparers work seasonally, which drags down the overall average. (Fifteen years ago, “Jeopardy” champion Ken Jennings finally crashed and burned after 74 games when he couldn’t name the company whose 70,000 seasonal white-collar employees work only four months per year. The answer? H&R Block.)

Unfortunately for those who do nothing but prepare returns, job prospects aren’t especially bright. (And it’s not because the taxes themselves are going away.) Technology, which used to help preparers do their job more efficiently, is now threatening to do their jobs for them. That’s a real threat to the sort of storefront preparers who just record the history their customers bring them.

For the same period, the country’s 1.24 million accountants and auditors, whose broader responsibilities include preparing financial statements and giving actual advice, earned an average of $77,920. The bottom 10% bring in under $43,020 and the top 10% over $122,220. State averages ranged from $95,430 in New York to $59,960 in Mississippi.

Tax lawyers generally don’t prepare many tax returns. They also make considerably more than preparers and accountants, according to the website Salary Expert, pulling in an average of $145,746.

And how do prospects look for the rest of the tax industry? The Wall Street Journal recently published a report on the Tax Cuts and Jobs Act, and reported that, “many of the jobs it is creating, it turns out, are in the tax industry.” Firms are fighting for qualified employees. The paper quoted one executive as saying “There’s no doubt that the talent wars in tax have definitely heated up.” (Can you imagine talent wars in tax!)

So what should we conclude from our nosy snoop through tax salaries? It looks to us like the real news is tax pros who tell you how much you owe earn a decent income — but those who help you pay less are worth more. And in the end, isn’t paying less what you really want? So call us when you’re ready to save, and see just how valuable we can really be!

]]>https://www.calculatedmoves.com/champagne-wishes-and-caviar-dreams/Kondomaniahttp://feedproxy.google.com/~r/charlottecpafirm/lHAp/~3/f1H2EqlyKqE/
Wed, 06 Feb 2019 19:47:22 +0000https://www.charlottecpafirm.com/?p=6270America’s economy has morphed throughout our history, starting from agricultural to manufacturing to service to technology. Now it seems we’re moving towards a celebrity-based economy. The world is full of D-list celebrities competing for attention: third-rate rappers hoping to break through their own noise, random Kardashian cousins, and spurned bachelorettes fighting for one last rose. … Continued

America’s economy has morphed throughout our history, starting from agricultural to manufacturing to service to technology. Now it seems we’re moving towards a celebrity-based economy. The world is full of D-list celebrities competing for attention: third-rate rappers hoping to break through their own noise, random Kardashian cousins, and spurned bachelorettes fighting for one last rose. (If you’re ever invited to compete on Dancing With the Stars, you’d better hope you were nice to people on your way up, because you’re about to see if they’ll be nice to you on your way down.)

America’s unlikeliest new celebrity is a Japanese woman named Marie Kondo, who created a mini-empire around The Life Changing Magic of Tidying Up. She’s spun the concept into a line of bestselling books, including a graphic novel, and an eight-episode series on Netflix. (No doubt there’s a line of designer-branded plastic storage bins headed to a Target near you soon.)

Now, you’re probably thinking you’ve got to squint pretty hard to find a connection between tidying up and taxes. (And you’re right . . . cut us some slack, it’s not always easy to come up with topics every week!) But once that connection jumps out, you’ll wonder why you missed it all these years.

The KonMari method starts with holding a physical object and asking yourself a simple question: does it spark joy? If so, find the right place for it, and enjoy how it adds to your life. If not, respectfully let it go. She suggests you start with clothing, because it’s easiest to discard, then move on to books, papers, “komono” (miscellaneous “stuff”), and finish up with sentimental items. Kondo even prescribes how to fold the clothes you keep — nearly a million people have watched a video of her folding socks.

Now, try this with your money — take a look at where it goes. There are plenty of expenses that really do spark joy. A family vacation, a kitchen renovation, or even a night out on the town all bring a smile to your face and make you feel good about yourself and your choices. Even big-ticket bills like your children’s college tuition spark joy as you watch them prepare to succeed in life.

But if you’re like most of our clients, your biggest single expense is taxes. Does writing those checks (or seeing them deducted from your paycheck) spark joy? Maybe at the local level. Plenty of people vote “yes” on local levies, then gratefully enjoy their schools, parks, and libraries. But very few people find joy in sending up to 40.8% of their income to Washington and watching the people in charge of spending it shut down the government for five weeks because they’re more interested in scoring points than solving problems.

Now, the world is full of tax professionals who are happy to take those W2s and 1099s that are starting to clutter up your desk right now, and assemble them into a tax return. They’ll tell you how much you owe, which is what you need. But very few of them will tell you how to pay less, which is what you want. To continue the Marie Kondo analogy, they’ll help you inventory your closet. And that’s important, because you’ll need to know where that ugly Christmas sweater is when next year’s party rolls around. But they won’t help you clean it out. Because, really, ugly sweater?

So, ready to clean up your tax bill? We’ll work through your business, your retirement, and your investment portfolio. We’ll fold it all into easy-to-pack little balls. You’ll love the feeling of zen and you might even see your blood pressure drop. So call us when you’re ready and see just how tidy we can help you get!

]]>https://www.calculatedmoves.com/kondomania/Piggy Piggy Piggyhttp://feedproxy.google.com/~r/charlottecpafirm/lHAp/~3/dgnSaQznPdU/
Tue, 29 Jan 2019 21:56:49 +0000https://www.charlottecpafirm.com/?p=6263On January 1, we switched our calendars from 2018 to 2019. But in China, February 5 is the date for setting off fireworks. This year, we’re ushering in the Year of the Pig. The pig is the last animal in the Chinese zodiac — according to one Chinese legend, he overslept for the Jade Emperor’s … Continued

]]>On January 1, we switched our calendars from 2018 to 2019. But in China, February 5 is the date for setting off fireworks. This year, we’re ushering in the Year of the Pig. The pig is the last animal in the Chinese zodiac — according to one Chinese legend, he overslept for the Jade Emperor’s great meeting of the animals in heaven. Men born in the year of the pig are optimistic, gentle, and focused. Women born in the year of the pig are full of excitement, trustworthy, and have good fortune with wealth. (No fortune cookie jokes, please!)

We’re 20ish years into the new millennium now. Driverless cars are starting to take to the streets, and Amazon is working on drone deliveries. So you might think naming a year after a barnyard animal is silly. But hey, just in the last month, Chinese scientists planted cotton on the dark side of the moon, while here in the U.S., the government counseled furloughed employees to pick up side gigs babysitting and pawn their kidneys. Who’s to say the Chinese aren’t on to something?

Naturally, the Year of the Pig got us wondering just how piggy the Peoples’ Republic gets with taxes. You’d probably expect them to be pretty high, considering the “Communists” have been running things since Truman was President. But it’s been a long time since any real Marxists have been in charge. It turns out that communism is bad for business! (Also, jokes about communism aren’t funny if everyone doesn’t get them.) So you might be surprised at just how much China’s tax system has come to look like ours.

Chinese employers withhold income and social security taxes just like here. Income taxes start at 3% on salaries up to 1,500 yuan/month (about $225) and top out at 45% over 80,000 yuan ($12,000). Social security varies from city to city, with employers generally contributing 33% and employees paying another 11%. If your only income is salary under 10,000 yuan/month, you don’t have to file a tax return.

Business owners pay 5-35% on their earnings. (What would Chairman Mao think of that?) Individuals also pay 20% on investment income and capital gains, including real estate sales. Individual tax returns are due on March 31, with extensions granted under special circumstances only. Husbands and wives file individually; there are no joint returns.

Corporations typically pay 25% on their profits. However, the World Bank reported in 2017 that China’s total corporate tax burden, including property taxes and value-added taxes, swallows about 68% of profits. And China appears to impose some indirect “taxes” that our Congress would have a hard time passing. For example, Poland and Canada have just arrested executives from telecom giant Huawei for espionage, which suggests the People’s Republic is “taxing” companies for more than just cash.

China also imposes a grab bag of value-added taxes, consumption taxes, and property taxes. Then there are “behavioral” taxes that include a vehicle and vessel use tax, a license-plate tax, a slaughter tax, and a banquet tax. (We’re pretty sure the poor piglet is jazzed about those last two.) And China is on the forefront of using facial recognition software to monitor citizens, so you’ve got to imagine they’re pretty good at rooting out tax cheats.

Americans celebrate St. Patrick’s Day by drinking Guinness, and Cinco de Mayo by drinking Corona. So why don’t more of us celebrate Chinese New Year with a Tsingtao or two? Call us any day you’re ready to pay less American tax and we’ll give you something to celebrate!

]]>https://www.calculatedmoves.com/piggy-piggy-piggy/Cash Flow vs. Profit: Where should your eye be focused?http://feedproxy.google.com/~r/charlottecpafirm/lHAp/~3/bwTrNDMFjdc/
Tue, 29 Jan 2019 20:52:18 +0000https://www.charlottecpafirm.com/?p=6258Transcript: Hi, I’m Donna Bordeaux with Calculated Moves. I am often asked why a bank balance does not equal the profit in the business after the month is done. Let’s take a moment to go through a little bit of how cash flow works and why it’s different than profit. So, this is a chart … Continued

Hi, I’m Donna Bordeaux with Calculated Moves. I am often asked why a bank balance does not equal the profit in the business after the month is done. Let’s take a moment to go through a little bit of how cash flow works and why it’s different than profit. So, this is a chart that we utilize in one of our tools that gives feedback to our clients on how things are going in a more graphical way. This indicates that revenue for this particular month was around $40,000. This business had a cost of sales reduction. So this was probably due to a return or something small. Wherever you see red is spending of money, not the inflow of cash. They spent about $18,000. Those are all things like the normal expenditures in day to day business — rent, payroll, keeping the lights on, and those kinds of things.

That is typically where people think the profit part stops, but it’s not the only thing that affects your cash flow. That’s where business owners get really confused. Things like paying taxes or setting aside money for taxes also affect cash flow. In this case, they had an increase in their accounts payable, so they owe more money to vendors and they didn’t spend the cash. They just accrued the liability in another current liability. This change, the negative $11000 looks like they paid down something, so maybe they paid off or paid down a credit card or debt or maybe made loan payments. In this case, they also had a change in inventory, so they stocked up on some inventory before the end of the year. That resulted in their physical count showing that they spent another $3,300 on inventory.

That netted a cash flow effect on free cash of $18,991 in this example. If you buy things like fixed assets, have some closing costs on loan, or make some investments, it is also going to affect your cash flow but not to your net profit. There also maybe have some interest in this case.

The change in retained earnings or other equity would be distributions that the owner took out of the business. They took the cash flow because they had to spend it on their personal bills. This is a big one that affects cashflow. So many owners overlook when they take the money out of the business in ways other than the traditional expenses like payroll. They are reducing the cashflow that’s available. Be careful that you still have money left over to cover the taxes and pay all the other expenditures in the business the following month.

Let’s look at “free cashflow”. The business generated almost $19,000 in cash. The owner took out $2,340 in distributions. So the net cash flow was $16,652. If we were looking at the bank statement in this situation, we would see that the bank balance from the prior month should have $16,652 more in it at the end of the month than at the beginning. This happened to be a good month in December for this retailer, so they were able to add a good bit of cash back into their balance. This is something you want to watch over if you are concerned about cash flow. We offer solutions we can help you with and a can implement strategies to make sure that cash flow is not an ongoing issue for your business.